Indiabulls Housing Finance launches Rs 735 crore QIP; Exploring options for partial divestment in OakNorth Bank Ltd

Mortgage financier Indiabulls Housing Finance Ltd has launched a qualified institutional placement (QIP) offering to raise funds from institutional investors. According to published reports, the company is looking to raise around Rs 735 crore through QIP. The proceeds of the QIP will be used to strengthen its capital base and its balance sheet.

According to reports, the floor price for the QIP has been decided at Rs 206.7 per share and a discount of up to 5 per cent can be given on it. CLSA, IDFC Securities and SBI Capital are the investment banks working on the deal.

The country's third-largest home finance player Indiabulls Housing in a stock exchange filing said, "the meeting of the Board of Directors of the Company is scheduled on 14/09/2020, inter alia, to consider and approve the issue price, including a discount, if any thereto as permitted under the SEBI ICDR Regulations, for the Equity Shares to be allotted to qualified institutional buyers, pursuant to the Issue." It added, "In compliance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, as amended, the trading window of the Company has been closed and shall remain closed till 48 hours after the aforesaid meeting."

Qualified institutional placement (QIP)

A QIP is a capital-raising tool for the listed companies in which they can raise funds through equity or equity-linked instruments in a shorter time frame. It is a way in which they can raise fund/ capital without submitting legal paperwork to market regulators. It is common in India and other Southeast Asian countries. The Securities and Exchange Board of India (SEBI) created the rule to avoid the dependence of companies on foreign capital resources.

Divestment of shareholding in OakNorth Bank Ltd

Apart from this, Indiabulls Housing Finance in a separate filing said, the cIndiabulls Housing Finance, OakNorth Bank Ltd, qualified institutional placementompany is in the process to explore various options for a partial divestment of its equity shareholding in OakNorth Bank Ltd. The process will be completed in one or more tranches.

It added, the divestment shall result in boosting CRAR and shall free up capital to grow the loan book of the Company. The Company had invested Rs 663 crores in November 2015 for a 40 per cent stake in the bank. Within two years of this, in November 2017, the company recouped its investment by selling ~10 per cent of the bank to Government of Singapore owned investment arm GIC for Rs 770 crores.

Founded in 2015 to address the mid-market funding gap in the UK, a highly competitive and regulated market, OakNorth Bank became profitable in just 11 months, and within four years of operations has grown its deposits to just under £ 3 billion and its loan book to over £ 4 billion.